The invention relates generally to a system and method of calculating a commission and in particular to a system and method of creating an adjustable commission based on a selection of variables.
A variety of different real estate services are available to owners of real property who wish to sell their property. A typical real estate commission is based on the selling price of the real estate and is generally expressed as a percentage of the selling price (typically around 5-7% of the selling price). The commission is typically split between the selling agent and broker and the buying agent and broker. In some instances, the selling agent and broker and the buying agent and broker are the same. In the typical commission transaction, the commission is one fee that covers all expenses associated with selling the property. Such expenses may be associated with advertising, marketing, administrative matters, travel expenses, etc.
Recently, other options for selling property have become available to real property owners through discount brokers and discount real estate sales agents (collectively “discount service providers”). Discount service providers may provide a set fee for selling the real property, rather than a commission based on a percentage of the sales price of the real property. The set fee is typically much lower than 5-7% of the selling price. Other discount service providers may offer selected services, such as placing the real property on the Multiple Listing Service (MLS), providing advertising signs to be placed on the property, and placing advertisements in newspapers. In such an arrangement, the seller may be responsible for selling the real property on their own (i.e., without the assistance of a real estate agent). In other cases, the owner may offer a percentage commission to an agent for bringing a buyer to the property. This commission is usually half of the typical overall percentage (approximately 3-4%). Such services are available from, http://www.forsalebyowner.com, http://www.realestatecafe.com, http://www.helpusell.com, and http://www.assist2sell.com.
Typically, the services described above, are provided with little or no flexibility as to what services the owner of the real property needs. In some cases, the owner of real property may not receive certain services they need or want. In other cases, the owner may receive services they do not need, yet the cost is usually not adjusted. These services do not consider real time events that can impact the commission rate.
In most real estate sales situations, there are a variety of factors that affect how fast the property will sell and what selling price can be obtained. Some of these factors include location of the property, condition of the property, and conditions related to the economy, such as interest rates for mortgages. Yet, the commission and/or fees are typically the same regardless of these factors. Also, as economic and market conditions change, as well as changed circumstances for the owner of the property, the services needed by the owner may also change. For example, a property that sells in two weeks has lower marketing costs than one that sells over a period of several months.
Thus, there is a need for a method for providing a real estate commission or fee that can be custom designed to meet the requirements of the particular owner of the property. There is also a need for a method of providing a commission or fee that is adjustable as factors and conditions change that may affect the sale of the property.